Congress is considering increasing farm subsidies, but limiting the ability of couples making over $2 million a year to collect them:

A prominent San Francisco patron of the arts, Constance Bowles -- heiress of an early California cattle baron, widow of a former director of UC Berkeley's Bancroft library and a resident of Pacific Heights -- was the largest recipient of federal cotton subsidies in the state of California between 2003 and 2005, collecting more than $1.2 million, according to the latest available data.

That is the way U.S. farm programs are designed to work. Five crops -- cotton, corn, wheat, rice and soybeans -- received 92 percent of the $21 billion in federal farm payments last year. The biggest payments go to the biggest farms.

That also is pretty much the way farm programs will continue to work for the next five years under mammoth legislation scheduled today for a House vote.

House Speaker Nancy Pelosi of San Francisco has endorsed the new farm bill, produced by the House Agriculture Committee to run programs for the next five years, as a major reform because it limits annual payments to farmers who earn $1 million a year.

The income limit for a couple would actually be $2 million, because a husband and wife each could collect.

If the bill becomes law, the U.S. Department of Agriculture says the cap will affect just 3,100 farmers, assuming they do not use accounting tactics to reduce their taxable income. Actual payments to farmers would rise over the five years authorized by the bill. The bill is over budget, so Democratic leaders propose a $4 billion tax increase on U.S. subsidiaries of foreign companies to pay for it. . . .

California's top subsidy recipient from 2003 to 2005, Bowles, 88, of San Francisco, collected the $1.2 million in mostly cotton payments through her family's 6,000-acre farm, the Bowles Farming Co., in Los Banos (Merced County). She could not be reached for comment.

Another family member, George "Corky" Bowles, who died in 2005, collected $1.19 million over the same period. George Bowles once ran the farm but lived on Telegraph Hill. A collector of rare books and 18th century English porcelain, he served as a director of the San Francisco Opera and a trustee of the Fine Arts Museums.

The farm is run by Phillip Bowles in San Francisco. Phillip Bowles was on vacation Tuesday and could not be reached. He told KGO television last week that he's no fan of subsidies, but if big cotton growers in Texas get them, so should he.

"Many of these businesses are getting 20 to 30 to sometimes 40 percent of their gross revenues directly from the government," Phillip Bowles told KGO. "I don't have a good explanation for that. Somebody else might, but it beats me."

Economists say they can find no rationale for the subsidies, which started in 1933 as temporary aid for small farmers devastated by the Dust Bowl and the Great Depression. Then, a quarter of Americans lived on farms. Today, less than 1 percent do -- so few that the Census Bureau quit counting. . . .

"If the best the committee could do is say these payments are to help people in need, and we're going to define for farm legislation that somebody's in need if the family makes $2 million a year -- a million for the husband and a million for the wife -- that's a little strange. If these are really welfare programs for the needy, we don't normally cut those off at $1 million. It's more like $20,000."

Matthew Lesko would be proud. NBA great Scottie Pippen is apparently a farmer. From 2003-2005, Pippen earned $78,945 in government checks for land he controls in Arkansas. That's according to information that will be available tomorrow from the Environmental Working Group, a public interest group that is seeking a better distribution of farm subsidies.

Pippen made about $110 million throughout his NBA career, but let us remind you why he needs this. He lost $27 million in bad investments and, as of February, he owed $5 million to a bank for a dispute with a private jet company. And he just sold a 2.28-acre property with 18,700-square foot mansion sitting on it for $2.95 million. He and his wife paid $4 million for it in 2000.

If this goes forward, expect some beefy guys in cheap suits and John Deere hats to sit next to Sally Field at a congressional hearing.
Had a friend who used to put an quarter acre of his large out-suburban back yard into pumpkins. In mid-October, he piled the result by the side of the road with a cigar box for the $1 apiece.
Claimed the tax code for farmers got him $3000 a year.
He had a good job at GM, and his wife at a school system.
I have heard, but not confirmed, that the Ag Dept counts only farm income, so this guy would be one of those starving farmers we keep hearing about. Anybody know?

This is apparently how Congress cleans itself up, after the Democrats came back into power this year promising to clean up the corruption. Their answer? Crank up the pork.

Yes, it is a problem if the really rich get farm subsidies. But the answer is not to cut out the top 3,100 wealthiest "farmers" and crank up the pork for everyone else, but rather to just cut it out entirely. Or, at least significantly reduce it.

So, the taxpayers get it coming and going here. They pay the subsidies not to produce, and then get higher food prices as a result.

Quick, somebody better inform us as to why it's all the liberals' fault!

Because they came back to power with a promise to clean up Congress, but instead have cranked up the pork. And note who is announcing the new pork - none other than Speaker Pelosi, from the great farming district of San Francisco. Wonder how many of her other constituents are going to benefit from this?

Actually, I am sure that this is bi-partisan. Both parties are bellied up to the trough. It is just that Pelosi is so proud of this, that I think the libs are getting the brunt here.

For a VC readership that tends to lean toward the libertarian side, I doubt that anyone was misled.

I bet I'd oppose the bill if I knew what it did. What's in it? Is it an increase in rates from before? An increase in total figures? Who votes for these things and who votes against? Lotta insinuation.

I hate farm subsidies. I hate almost all subsidies. I say almost all, because I am sure there are some that I can't think of right now that might be acceptable.

Farm subsidies fuel obesity, they go counter to the American model of capitalism, increase illegal immigration, waste money, etc. It is an absolute joke they have continued for so long. It is also a testament to the power of pork.

Bruce Hayden: I appreciate your effort, especially your last line ("I am sure that this is bi-partisan").

However, there's one fatal flaw in your analysis, one that's quite common on these bash-all-things-liberal-all-the-time comment threads: you're equating "Democrat" with "liberal." It's amazing that smart people still continue to do this.

Not to nit pick but reform doesn't necessarily have anything to do with funding. We often conflate the two but a bad program is a bad program even if we reduce the funding. Nothing has been reformed in the process if the program is still rife with abuse. Likewise, if funding goes up for a program but it's been fixed so that it's no longer subject to fraud or abuse, that could be considered reform. Now whether that applies to this case is what should be the focus of discussion.

A remarkably fact-free bunch of criticisms. I still have no idea whether the total number of subsidies goes up or down, whether more or less folks who got subsidies are now getting them. But I DO know that "them libruals" are all corrupt and uninterested in reform, so I guess I "learned" something.

Quick, somebody better inform us as to why it's all the liberals' fault!

You are aware that the farm programs were part of the New Deal under the FDR (liberal democrat) administration?

The democrats have been big supporters of economically and socially disastrous farm programs. So have the republicans.

The lesson here is once an entitlement program is started rent seeking, regulatory capture, and the pernicious influence of concentrated benefits with diffuse costs appear.

The end result of these influences is a entitlement program that in the end has no resemblance to the one that was originally put in place. Furthermore, the final program often ends up producing results that are exactly opposite of what the entitlement was supposed to accomplish

Liberals / democrats can't seem to make themselves aware of this fact.

Too many republicans / conservatives give the risks lip service and then proceed to pile on the vote getting pork.

While you have been (somewhat) bi-partisan, may I remind you that Republicans controlled the Congress and the Presidency from 2000-2006, and those were not (to put it kindly) great years for pork reduction.

While you have been (somewhat) bi-partisan, may I remind you that Republicans controlled the Congress and the Presidency from 2000-2006, and those were not (to put it kindly) great years for pork reduction.

Agreed. But my point earlier is that at least part of the reason that the Republicans lost control was because they had slid into the pork mentality. Some of them have figured out that the only way that they can hope to regain a majority is to get serious about this sort of thing. But too many of them, esp. in the Senate, are still lined up at the trough.

Bruce Hayden: I appreciate your effort, especially your last line ("I am sure that this is bi-partisan").
However, there's one fatal flaw in your analysis, one that's quite common on these bash-all-things-liberal-all-the-time comment threads: you're equating "Democrat" with "liberal."

It's amazing that smart people still continue to do this.

Maybe this gets back to the discussion we had awhile back as to whether libertarians could also be liberal or progressive or whatever. Some seem to think that that is a more natural fit than with conservatives.

I would have to agree with the previous poster who pointed out that farm subsidies were a New Deal program, and have been with us ever since. So, they may not fit in today with liberal philosophy, but are/were a liberal/ progressive policy.

But you are right, I did jump from Democrat to liberal, and that was unjustified. I have no doubt that many of the liberals here will be just as offended by this "Reform" as are many of the more conservative posters.

As noted in the Times today, the controversy now in Congress is more regional than ideological. In part Pelosi and the Dems trying to protect their new "conservative" members, who were elected from more rural districts.

I'm a bit surprised to find visitors to this blog trusting the accuracy of any report emanating from San Francisco. This blog from middle America might be more appealing to the free market/libertarian tastes of this audience: http://www.agweb.com/blogger/

The original post is factually accurate but presents only one side of a very complex issue. My family farms cotton, corn and soy beans. For those of you who may be interrested, here are a couple of comments from the agribusiness standpoint:

I am pretty much responding to points as I read through the post.

Note that adjusted gross income (AGI) is not net income to farmers. Principal repayment on debt must come out of AGI. AGI also includes some return for equity invested in the farm. Farmer income represents a combination of implicit returns to farmer and unpaid family labor and return on equity invested in the farm. If farm program payments are limited to only the poor, then there will be no incentive to invest in agriculture.

Of course farm payments go primarily to larger farms, but that is because larger farms produce most of our food and fiber. That's intuitive. In addition, approx. half of all farm land is rented, so landlords receive a share of payments passed through to them by the farmer/tenants. The examples and statistics cited do not tell us how much of the gross amounts paid to the individual farmers may have been passed through to numerous landlords, many of whom are likely small landowners who receive correspondingly small amounts of the gross payment.

Payments are based in part on market prices, so if a business is getting 20-40 percent of revenue from the government it means that market prices are roughly 60-80 percent of the govt "target" price. That's generally been the case in cotton.

One problem with the farm policy debate is that it has been couched in terms of farm "welfare." To use cotton, for an example, prices are low due to several reasons. One is that our govt stopped protecting our domestic textile industry in its pursuit of free trade. It fled to Mexico and Central America in search of cheap labor and has since gone to the Far East. Now that China is our major buyer, prices depend on how China plays the game. China wields a great deal of market power because it acts as a monopolist -a single buyer. It also has structured its tariff system and domestic farm support so that it uses all domestic production before it imports cotton. That leaves the U.S. out in the cold. So rather than welfare, farm programs provide protection against unfair trading practices.

There are at least three valid rationales for farm programs. The first is that agriculture is a public good. The U.S. benefits in non-market ways from having a vibrant agricultural industry. These benefits do no appear in the classic demand curve which simply plots price against quantitiy. So, the social benefit curve (societal demand) will be well to the right of the market demand curve. Because of that, it is in the interest of society to support ag production at a level that is higher than what the market would determine.

The second point is the one I mentioned above, that we need to protect our industry against market distorting policies of other countries (subsidies and tariffs).

Finally, farm programs provide a safety net for all of agriculture. The issue isn't one of supporting an individual farmer (welfare) but instead of supporting an entire industry. Several years ago we saw cotton prices at a low level we hadn't seen in forty years. Without a price safety net, farms would have gone out of business and there would have been economic chaos in rural America. The safety net provides another non-market benefit - insuring against such chaos.

I don't have time to take issue with Mr. Van Morgan on an item by item basis. Rather, let me choose just one point in his economically and politically and morally flawed argument supporting farm subsidies.

He says, "... we need to protect our industry against market distorting policies of other countries (subsidies and tariffs.)"

Let me say just a couple things on this topic. If the US protected EVERY industry that is harmed by "market distorting policies of other countries" we'd be subsidising every company in the US - not just agriculture. What on earth makes farmers believe they're entitled to that kind of protection? Is GM entitled? Ford? IBM? Microsoft? The American textile worker? Auto worker? Engineer?

Agriculture (much as farmers are loathe to admit) holds no special place in the American economy, so let's not resort to an appeal that should have gone away a century ago.

There is virtually no justification for supporting cotton. It's (essentially) a fungible product more suited being grown in African nations that are desperate for a cash crop.

The recent scare about tainted food from China suggests that one thing the Ag Bill should do is impose the same inspection demands on all imported food products as are imposed on our own farmers.

There is also a (in my view weak) national security argument. By growing our own food, we cannot be held hostage by an enemy denying us food shipments. In California, ag land that no longer can support agriculture does not go fallow; it gets turned into housing developments. Recovering the land for agricultural purposes is essentially impossible.

I would also like to register my total confusion with VanMorgan's post. His second point has already been addressed above, so instead I will turn to his other two.

First, besides the (as already pointed out above, extremely weak) national security argument, in what conceivable way is agriculture a public good? I would love to know what the intangible benefits are that we are all receiving from our unbelievably large payments we are making to this sector of the economy. I personally can't think of any.

His final point is also not a point at all; I don't understand how it helps his case to note that we're not just funding a few farmers, we're funding LOTS farmers. As it turns out, a lot of waste and inefficiency is worse than a little waste and inefficiency. The "safety net" simply ensures that the resources being used will never be switched to a higher value use.

Finally, getting rid of farm subsidies should be something everyone can agree on (except probably the farmers). The democrats should be against subsidizing farming because it destroys the environment, and the republicans should be against it because it's an unbelievably large handout.

I'm not saying i hate farming; I'm just saying farming should be treated the same as everything else.

While you have been (somewhat) bi-partisan, may I remind you that Republicans controlled the Congress and the Presidency from 2000-2006, and those were not (to put it kindly) great years for pork reduction.

That is big chunk of the reason the republicans no longer control the congress.

The bigger point is entitlement programs are always started to help the little guy.
Within femto seconds of being created the rent seeking, etc. kick in and these programs always end up helping the "big guys. Always, always, always this happens.

The bigger point is entitlement programs are always started to help the little guy. Within femto seconds of being created the rent seeking, etc. kick in and these programs always end up helping the "big guys. Always, always, always this happens.

I guess this is part of why I am somewhat libertarian. But he is right, it is almost inevitable. We shouldn't expect anything else, in a government program that is over 60 years old now.